2024-08-07 18:30:19
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Chile’s largest steel mill said it would close in the face of competition from cheap Chinese imports, a blow to the government which had imposed tariffs on China earlier this year in an effort to save the plant.
Chilean steelmaker CAP, which operates the Huachipato steel mill in central Chile’s Biobío region, said on Wednesday it would shut its steel operations “indefinitely” in September, blaming a massive influx of imported steel from China over the past two years for losses of more than $500 million.
Chilean officials consider the Huachipato steel plant to be strategically important as a major supplier of steel to Chile’s massive copper mining industry. The plant directly and indirectly employs about 20,000 people in Biobío county.
“This is a very devastating decision for the Biobío region, and the whole country knows that our government has made great efforts to reverse this situation,” Guatemala’s Economy Minister Nicolás Grau said on Wednesday.
China is Chile’s main trading partner, accounting for nearly 40% of its exports – the highest share among Latin American countries.
Over the past two years, governments in Latin America and Asia have complained about a surge in cheap Chinese exports across a range of industries as the world’s second-largest economy has struggled with weak domestic demand.
Latin American steel industry group Aracero said the region’s imports of Chinese steel will reach a record 10 million tons in 2023, up 44% from 2022.
Huachipato suspended production in March due to the impact of Chinese imports. The Chilean government then imposed a provisional tariff of 34% on steel balls from China and 25% on steel bars used to make them for six months. Officials said the measures could be extended pending the results of an ongoing anti-dumping investigation by Chile’s Anti-Price Distortion Commission.
In June, China’s ambassador to Santiago told Chilean media that the tariffs “harmed the legitimate interests of Chinese steel companies” and “undermined economic and trade relations between the two countries.”
But CAP, which also mines iron ore in Chile, said on Wednesday that despite the tariffs, market conditions meant it could not raise steel prices and that “it is not economically viable to continue steel operations in Chile in its current form.”
Grau called the decision to close the plant “irresponsible” and accused CAP and local steel ball manufacturer Molycop of “failing to reach an agreement on sales and pricing that they could have reached given the new market conditions created by the tariffs.”
He added that the government would “continue to do everything possible [possible] We are working to reverse this decision.”
A previous version incorrectly identified the Huachipato plant, so this article has been amended As the only steel mill in Chile
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